Comp Wiz sells computers. During May, it sold 350 computers at a $1,200 average price each. The May fixed budget included sales of 365 computers at an average price of $1,100 each. 1. Compute the sales price variance and classify it as favorable or unfavorable. 2. Compute the sales volume variance and classify it as favorable or unfavorable.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Comp Wiz sells computers. During May, it sold 350 computers at a $1,200 average price each. The May
fixed budget included sales of 365 computers at an average price of $1,100 each.
1. Compute the sales price variance and classify it as favorable or unfavorable.
2. Compute the sales volume variance and classify it as favorable or unfavorable.
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